BG & Southern Union to Expand Lake Charles LNG Terminal

Lake Charles LNG
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BG LNG Services LLC has entered into an agreement with Trunkline LNG Company and Trunkline Gas Company, subsidiaries of Southern Union Company of Pennsylvania, for the Phase 11 expansion of the Louisiana-based Lake Charles Liquefied Natural Gas (LNG) import terminal, in which BG has had rights to 100% of the capacity. The cost of Phase 11 will be paid by Southern Union's subsidiaries.

Work is already under way on Phase 1 of the expansion, announced in October 2001, which will increase average daily terminal send-out from the current 630 million cubic feet a day to 1.2 billion cubic feet (bcf) a day and terminal storage capacity from 6.3 bcf to 9 bcf.

Phase 11, announced by Southern Union today, will result in an incremental increase in average daily terminal send-out of 50% to 1.8 bcf a day.

Betsy Spomer, Chief Executive, BG LNG Services LLC, said: "This new agreement with Trunkline is another important step in the development of BG's LNG strategy. It also underlines our ability to increase deliveries into the United States in response to the country's growing energy demand.

"From the beginning of this year, BG has had rights to 100% of the capacity at the Lake Charles terminal North America's largest. This expansion of our send-out capability will ensure we are well equipped to deal with future market opportunities."

Under Phase 11, Trunkline LNG will construct additional pumps and vaporisers, together with unloading facilities added to a second dock. In addition, Trunkline Gas will build a second 30-inch-diameter, 230-mile natural gas pipeline from the LNG terminal to transport gas produced from the additional expansion, thus increasing the total pipeline capacity out of the facility from 1.3 bcfd to 2.1 bcfd. It is expected that much of the Phase 11 work will be undertaken simultaneously with Phase 1.

Phase 1 of the expansion is scheduled to be completed and in service by 1 January 2006, with Phase 11 following in mid 2006.

The Phase 11 expansion and the pipeline construction plans require Federal Energy Regulatory Commission (FERC) approval. Trunkline LNG intends to file its application for such approval in February 2004, with construction beginning once approval has been granted.

The arrangement with Southern Union removes the need for the proposed Lake Charles Express pipeline extension. The FERC application for this has therefore been withdrawn.

In January 2002, BG LNG Services, LLC (BGLS), a wholly owned subsidiary of BG Group, took 81% of the capacity of Trunkline LNG's Lake Charles, Louisiana, LNG terminal, which has the capability to receive, store, vaporise and deliver 4.7 million tonnes per annum (mtpa). From 1 January 2004, BG has had rights to 100% of the capacity at Lake Charles.

In March 2003, the Federal Energy Regulatory Commission gave approval for expansion of the terminal to 8.9 mtpa (1.2 bcfd). Construction of the expansion is expected to be complete by the beginning of 2006.

In December 2003, BG announced that BG LNG Services and BG Gas Marketing Ltd (BGGM) had completed an agreement with El Paso Merchant Energy (EPME) to acquire all of EPME's capacity in the Elba Island LNG regasification terminal near Savannah, Georgia, and related LNG purchase and gas sale agreements.

BG LNG Services, in conjunction with Keyspan, is also seeking to develop and upgrade an NG terminal at Providence, Rhode Island. If successful, this may be the first new import terminal to open in the USA for several years.

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